ITAD Ruling No. 095-00

August 1, 2000 ITAD RULING NO. 095-00 Sec. 106 Sec. 108 & Sec. 149 BIR Ruling 333-92 Embassy of France 16F Pacific Star Bldg. Sen. Gil Puyat Ave., cor. Makati Avenue, Makati City Attention: Jean-Charles Demarquis Deputy Chief of Mission Gentlemen : This has reference to your letter dated June 2, 2000 referred to this Office by the Department of Foreign Affairs (DEA), requesting for a tax-free local purchase of one (1) Honda CRV 2.0 specifically described as follows: Type of Use: Official Make: Honda CRV 2.0 A/T (5 door sedan, gas, 2.0li, PGM-FI, 4-speed automatic transmission, 150 hp) Model Year: 2000 Color: Dark Emerald Green Chassis Number: PADRD 1830YV 205886 Engine Number: PEWD7-Y305981 In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic Relations, pertinent portion of which reads: "ARTICLE 34 "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: "(a) indirect taxes of a kind which are normally incorporated in the price of the goods and services, cdlex xxx xxx xxx" the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from value added tax (VAT) and ad valorem taxes on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106 and 108, and ad valorem taxes under Section 149, both of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may grant exemptions to the Embassy of France or its personnel on their local purchases of goods and/or services it appearing from the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to Philippine Embassy personnel on their purchase of goods and services in your country. Hence, the local purchase of one (1) Honda CRV 2.0, for the official use of the Embassy of France is exempt from VAT and ad valorem. (BIR Ruling No. 333-92 dated October 27, 1992) Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group